Last week, US Congressman Mike Quigley (D-IL) introduced the Transparency in Government Act of 2014, a bill "to amend the Ethics in Government Act of 1978, the Rules of the House of Representatives, the Lobbying Disclosure Act of 1995, and the Federal Funding Accountability and Transparency Act of 2006 to improve access to information in the legislative and executive branches of the Government, and for other purposes." I am always worried about those other purposes, because funny things tend to get slipped into law this way, but the bill is interesting.

Government Executive Oversight calls it "a grab-bag transparency bill" that would "use technology to boost public oversight of program spending, standardize agency reporting on use of the Freedom of Information Act, shed greater light on lobbying and add new requirements for judges to disclose financial investments," as ell as "toughen online disclosure requirements for lawmakers’ personal finances, office expenses, gift reports and foreign travel." All that sounds like it is worth doing.

I especially like the idea of putting completed FOIA requests online, but would like to see the law go even further: if it's FOIAble it ought to be automatically disclosed and available to the public, not have to wait for individuals to file applications. I realize that this presents administrative costs but FOIA is a constructed barrier that unnecessarily imposes costs on individuals to release information that is of public benefit. If a government is producing thousands of pages of ultimately public documents I don't see why the individual must be forced to compel publicity in the vast majority of cases; the opposite should be true.

The other main part of the bill is its attempt to make public officials more honest about their backroom dealings, including politicking and rule changing.

Finally it's about time for another attempt to stop Congress from inside trading after they "quietly" undid the 2012 Stop Trading on Congressional Knowledge (STOCK) Act which was meant to curb this behavior. Congress, it seems, was worried that transparency would expose members to identity theft. This is something that Congress worries about a lot when it comes to themselves but seems incapable of determining how to stop when it comes to those not in Congress.

It is nice to see at least one Congress person push for transparency and accountability in Congress, but given past experience there is unfortunately all too much room for doubt that any reforms will stick even if they pass. I always hope to be proven wrong in this skeptical view.

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Reuters reports that the OECD will have a "public meeting" in Paris on Nov 12-13, at which "companies will get to voice their concerns about the OECD's 'base erosion and profit shifting,' or BEPS, project":

The United States Council for International Business (USCIB), representing about 300 U.S. multinationals, has asked to participate at the hearing, said Carol Doran Klein, USCIB's tax counsel, on Monday.

And here comes a parade of lobbying that will be designed to protect all that is favorable to their clients in the status quo. These are the moments when I really appreciate the amount of transparency we have in US politics thanks to organizations like Open Secrets, the Sunlight Foundation and Muckrock:

A number of U.S. companies, including E. I. du Pont de Nemours and Co, (DD.N) and Starbucks Corp (SBUX.O), have raised questions about the BEPS project with members of Congress and the Obama administration, according to corporate lobbying disclosures filed earlier this year.

Remember "raising questions' is like "raising concerns": it doesn't mean the speaker has either a question or a concern; instead it means the speaker has an agenda. The Reuter's story continues:

Under existing international standards, the fees charged [on an inter-company basis] are supposed to be set using an "arm's length" approach, meaning one that replicates market-level values. In practice, fees are often skewed so that profits can be shifted into the low-tax country where the assets are located and out of higher tax countries.

These practices are legal, but tax fairness activists and some less-developed countries are complaining about them.

On 12-13 November a consultation, open to the public and press, will be held at the OECD in Paris. If you wish to attend, please contact TPConference@oecd.org.

Is not public and press redundant? No matter: the point is, this is part of the public consultation portion of the BEPS program.Here is a draft agenda in pdf, and it is fascinating in lineup of both topics and speakers--namely, only two are named right now and one of them has been a long time and trusted voice of business interests against corporate tax transparency, and purveyor of norm framing exercises at the OECD, namely, GE's Will Morris; the other is Michelle Levac, noted as one of the 50 biggest influences in tax by International Tax Review, owing to her role in leading Working Party 6 on transfer pricing. These two get bookend treatment, opening and closing the consultation. All the other speakers are TBD, so this is where the USCIB seeks to gain a foothold. Here is the outline so far:

Programme

Public Consultation on Transfer Pricing
Matters

12-13 November 2013

OECD Conference Centre 2 Rue André Pascal, Paris 16th, France

Tuesday 12 November

08:30-09:30 Registration

09:30-09:50 Opening remarks and Ground Rules

Speakers:Michelle LEVAC, Chair of
Working Party No. 6

William MORRIS, BIAC

09:50-11:15
I: Implementing country-by-country
reporting The BEPS
Action Plan directs the OECD to develop and implement a system of
country-by-country reporting to tax authorities of high level MNE group
financial information. A large number of questions arise in connection
with implementing such a system. These include: (i) what
information should be reported; (ii) at what time should that information be
reported; (iii) to whom should such information be reported; and (iv) how
should such information be shared among relevant governments, taking into
consideration concerns regarding non-cooperative governments, incomplete treaty
information exchange obligations, and the need to protect confidential taxpayer
information. Speakers:
to be announced1. Information to be reported2. Information to be reported3. Mechanisms for reporting / to whom to
report / information sharing

11:15-11:45
Refreshment Break

11:45-13:15
II: White Paper on Transfer Pricing Documentation

The BEPS Action
Plan calls for the OECD to develop rules on transfer pricing documentation.
To initiate that process, the OECD published a White Paper on transfer
pricing documentation on 30 July 2013. The White Paper raises a number of
issues on which business has provided comments. These include: (i) the
implementation of a standardised two tier documentation system; (ii) the use
and content of a global master file; (iii) mechanisms for limiting early
reporting to information useful in risk assessment with subsequent opportunity
for governments to obtain detailed information necessary for audit; (iv) the
development of materiality standards; (v) implementing consistent documentation
formats across countries; and (vi) mechanisms for minimising unnecessary
compliance burdens.

On 30 July 2013
the OECD published a Revised Discussion Draft on Intangibles. In the RDD,
the definitional section was changed in some respects. In addition, a new
section of the RDD addresses comparability factors including location savings,
features of local markets, assembled workforce, and corporate synergies.
Discussion in the afternoon session will be devoted to definitional issues and
to the new section on comparability factors. Speakers: to be announced1. RDD changes to the definition of
intangibles2. Usefulness of the term “marketing
intangibles”3. Treatment of goodwill and on-going
concern value / Examples 16 and 18

Speakers: to be announced4.Treatment of location savings and local
market features5. Treatment of Assembled Workforce6. Treatment of group synergies7. The financing and guarantee examples /
Examples 1 and 2

Wednesday
13 November

09:30-11:00
V. Revised Discussion Draft On Transfer Pricing Aspects Of Intangibles –
Section B Of The RDDSection B of the June 2012 Discussion Draft
attracted numerous written comments and was the subject of much discussion at
the last business consultation. It has been substantially redrafted. The
approach in the RDD is more transactional in nature, while still emphasising
the primary importance of functions performed, assets used and risks assumed.
The morning discussion will focus on the changes to Section B and the
related examples

Speakers: to be announced1. The general approach of new section B.2. Examples 1 – 33. The treatment of outsourcing
arrangements4. The treatment of important functions

15:15-16:00
VIII: Transfer Pricing Aspects Of The Beps Action PlanThe BEPS
Action Plan published in July will guide much of the OECD transfer pricing work
in the next two years. The Action Plan contains four substantive transfer
pricing areas of work in Actions 4, 8, 9, and 10. This discussion will
provide business an early opportunity to comment on the transfer pricing
aspects of the Action Plan and the approach that Working Party No. 6 should
take to fulfilling its mandate under the Action Plan.

Speakers: to be announced1. How should the BEPS Project approach
the question of hard to value intangibles / particularly transfers of partially
developed intangibles?2. How should the BEPS Project approach
questions of risk allocations that may give rise to separation of income from
relevant economic activity?3. What role should there be for
approaches outside the arm's length principle in addressing BEPS issues?

Speakers: to be announced4. How should the BEPS project approach
the topic of recharacterisation of transactions?5. What should the BEPS project consider
in connection with global value chains and profit split approaches?6. What should the BEPS work on
financial transactions address?

Perhaps there will be additional public consultation meetings, I do not know. As Lynne LaTulippe taught my tax policy class recently, the consultation process is an often overlooked and in general understudied aspect of norm diffusion and lawmaking. This is one of the many times I wish that I was geographically situated to attend these things. I will be very interested to see how the speaker lineup evolves and would be very grateful to hear about the discussion from anyone who attends.

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Yariv Brauner recently posted "Whither Choice of Entity," in which he examines choice of entity and policy implications in support of the repeal of corporate taxation, or failing that, a redefining of corporate residence to move toward source-based taxation, preferably with formulary apportionment. He provides a comprehensive picture of the ongoing chaos created by entity classification and residence assignment rules. Brauner correctly mourns the lack of normative principles underlying the differential taxation of entities, which he attributes to the "unorganized thinking" that characterizes much of the discussion about how choice of entity rules impact people's business choices, and the general messiness of policy-making as it evolves haphazardly through lobbying and political posturing. He concludes:

In light of the incredible variety of options beyond mere incorporation or non-incorporations, one must wonder why tax law uses corporate or private law as the baseline for the application of its rules. Most importantly, why do we attribute importance to the act of incorporation? ...[T]here is nothing particularly special about businesses that carry a piece of paper stating that they are incorporated. A legal response to that may not be very feasible. We do not have a satisfactory legal answer to the central question: why do we tax corporations separately when only humans bear the burden of such taxation.

...The most obvious lesson is that the potentially negative impact of the corporate income tax on our tax system goes beyond the complexity it imposes on our tax system, and even beyond its negative political implications. In that, it reinforces the conclusion that the first-best step in a reform must include the elimination of the corporate income tax as a firm-level tax, perhaps replacing it with a withholding mechanism to preserve the efficacy of corporations as revenue collecting devices, or with other proxy solutions, such as mark-to-market taxation of public corporations only.

Another solution... may be to replace the current residence based taxation of entities that relies exclusively on corporate personhood with an alternative, more substantive tax regime. This could be an increasingly source-based rather than residence-based tax regime, yet such a reform faces several difficulties, including the need to retain residence as a primary determinant of taxation, the difficulty of identifying the source of income, the difficulty of asserting a fairness-based tax base division between source and residence once established, etc. A better solution would be to adopt formulary taxation that relies on agreement between competing jurisdictions rather than false pseudo-economic notions.

When, where, and at what rate to tax the income of business entities are the fundamental questions for the corporate income tax. Answers to those questions should remain independent of the taxpayer’s choice of business form, because one may achieve identical revenue outcomes with entity opacity or transparency. When the answers to those questions vary with business form and tax system structure, opportunities to arbitrage those differences across national borders and diminish or avoid tax on the corporate in- come inevitably emerge.

Tax professionals, administrators, academics, economists, and business participants may and often do disagree on whether a corporation’s (or other business entity’s) income from the operation of its business should be taxable to the corporation itself or taxable to its owners. Opinions also may diverge on whether to tax investment income differently from income from the operation of a business. Despite those disagreements, as long as there is to be an income tax, all will agree that the choice of one business form over another should not result in income from business operations escaping income tax completely.

Similarly, income should be subject to tax primarily where the taxpayer produces income from the operation of a business. Taxing income where the taxpayer’s principal office or seat of management happens to be makes sense only under a system that taxes residents and citizens on their worldwide incomes (a global model of taxation like the United States has) and then only secondarily to the place of income production in order to prevent taxpayers from gaining an advantage by placing their income in low-tax jurisdictions.

...[A] wholly transparent income tax system would improve existing corporate tax systems and establish tax neutrality between entities currently subject to the corporate income tax and those that are not. Full transparency is consistent with international treaty obligations and simultaneously eliminates many international tax arbitrage opportunities. Business needs rather than tax benefits would drive choice of business form. If accompanied by a robust system of international apportionment of business income, a fully transparent corporate income tax would eliminate most income allocation arbitrage as well as tax system structure arbitrage opportunities.

Read them both to get a good sense of the history, evolution, and ongoing challenges facing corporate income taxation.

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A fascinating account from the Sunlight Foundation of the gutting of a regulatory initiative by the kind of methodical persistence that can only be sustained by special interest groups with much to be gained from weak regulation:

In the three years since President Barack Obama signed the Dodd–Frank Wall Street Reform and Consumer Protection Act, federal regulators charged with implementing it have opened their doors to the biggest banks over and over again – 14 times as frequently as they have to representatives of consumer and pro-financial reform groups, a new Sunlight Foundation analysis finds.

By most accounts, the banks’ besiege-the-regulators strategy has yielded rich rewards in sapping, slowing, and stymieing regulations intended to prevent another massive financial crisis. The emerging consensus is that Dodd-Frank implementation is limping, while the big banks are poised to return to being the most profitable industry in the U.S.

The website feature an interactive showing the number of meetings by sector over the three years; you can mouse over the dots to see their identities. Is it any surprise that the Giant Vampire Squid is at the top with a whopping 222 meetings, followed closely by JP Morgan with 207? Each of these giants independently dwarfs the entire "pro-reform" group, that tiny cluster of dots on the other end of the graph.

Here's a chart depicting meetings by sector over time:

From the discussion:

In the 152 weeks our data cover, we find 59 weeks in which regulators met with financial sector representatives at least once every single day (Monday through Friday), and 47 weeks in which they met with financial sector representatives at least four times.

... By contrast, active pro-reform groups appeared in only 153 meetings logs – only about one meeting for every 14 regulators held with financial institutions and associations.
Moreover, 24.2 percent of pro-reform group meetings took place on a single issue: the Consumer Financial Protection Bureau.

...Law and lobbying firms, largely working in service of financial institutions, appeared in 707 meetings. Other, non-financial corporate interests, largely energy and agricultural companies, participated in 381 meetings. These companies are major purchasers of derivative contracts, which they use to hedge against price risk.

Imagine you're a regulator. 3,000 meetings with finance industry lobbyists, lawyers, and other corporate interests over three years, each one doing their best to explain why you should undermine the law as written in some tiny way. Would you not want to tear your hair out? Quit in despair? Or just give in to the soothing balm of lobbyist favor? What could possibly be left of the law after this barrage? Meanwhile the anti-regulation crowd has worked very diligently to kill Dodd-Frank's provisions in other ways, such as the lawsuit against the corporate tax transparency provisions sponsored by the American Petroleum Institute.

Sunlight catalogues the delays and dismantling of Dodd Frank that has been accomplished by all this lobbying and litigating and concludes:

...Collectively, the data offer a powerful testament to the oldest and still perhaps most effective technique in the lobbyist’s playbook: sheer persistence.
As the Dodd-Frank law passes its third anniversary, lagging on deadlines, and increasingly defanged, the meetings log data offer a compelling reason why: the banks have overwhelmed the regulators.

Lobbying pays, and it pays whether it is done before, during, or after legislation has been passed. This represents a major governance crisis with no redress anywhere to be found.

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Jesse Eisinger of ProPublica has a dealbook entry today, A Revolving Door in Washington With Spin, but Less Visibility, with insightful comments about governance. It would be a provocative and shocking article were it not for the utter familiarity of the story it tells about lobbying and lawmaking in America:

Obsess all you’d like about President Obama’s nomination of Mary Jo White to head the Securities and Exchange Commission. Who heads the agency is vital, but important fights in Washington are happening in quiet rooms, away from the media gaze.

...For lobbyists, the real targets are regulators and staff members for lawmakers.

Eisinger correctly states that while White herself will be subject to public scrutiny, her staff will mostly work in "untroubled anonymity." Cue the revolving door: on Jan. 25, Senate majority leader Harry Reid hired Cathy Koch to be his chief adviser on tax and economic policy. Eisinger points out an oddity:

The news release lists Ms. Koch’s admirable and formidable experience in the public sector. “Prior to joining Senator Reid’s office,” the release says, “Koch served as tax chief at the Senate Finance Committee.”

...[but in fact] immediately before joining Mr. Reid’s office, Ms. Koch wasn’t in government. She was working for a large corporation.

Just as the tax reform debate is heating up, Mr. Reid has put in place a person who is extraordinarily positioned to torpedo any tax reform that might draw a dollar out of G.E. — and, by extension, any big corporation.

...no rules prevent Ms. Koch from meeting with G.E. or working on issues that would affect the company.

...In a statement, the senator’s spokesman said, “The impulse in some quarters to reflexively cast suspicion on private sector experience is part of what makes qualified individuals reluctant to enter public service.”

But that's a silly thing to say because of course Ms. Koch just did enter public service, so either the spokesman is saying we couldn't get anyone qualified so we had to go with her, or we must imagine that the reluctance has been overcome by some expected reward. We don't have to think too hard to come up with some ideas about what that reward must be.

Eisinger moves on to a particularly fluid relationship between the Office of the Comptroller of the Currency and the Promontory Financial Group, which Eisinger calls "a classic Washington creature that is a private sector mirror image of a regulatory body." Julie Williams, who was chief counsel for the OCC last year, is now at Promontory, while her replacement, Amy Friend, is coming to the OCC from Promontory. Eisinger suggests that maybe they can swap back next year; that would at least save the taxpayers all the moving expenses back and forth between these two offices. Hey, we've got money problems here and it's not looking like they are going to be fixed--every litte bit helps. Eisinger concludes:

Washington today resembles something like the end of “Animal Farm.” People move from one side of the table to the other and up and down the Acela corridor with ease. An outsider looking at a negotiating table would glance from lobbyist to staff member, from colleague to former colleague, from pig to man and from man to pig and find it impossible to say which is which.

What can we expect when this passes for democratic governance? Nothing but more of the same, I think.

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For the life of me I cannot understand the FT's headline, which reads "Brussels fights US data privacy push." No, it's the US sending a team of lobbyists to fight against EU regulation--the penultimate sentence of the article even labels this "aggressive lobbying."

Why are the US lobby troops going into battle? Because the EU seeks to impose a fine of 2% of global annual revenues for any company, anywhere in the world, that violates the data rights accorded to EU citizens. US lobbyists and a sympathetic administration seem all too eager to push other countries to ease up on their regulatory burdens on US companies, so it is not surprising to see them in full force against the EU parliament here. But this effort is especially rich given that it comes at the very moment that the US is seeking to impose a fine of 30% on any company, anywhere in the word, that violates its own data sharing requirements. From the story:

Viviane Reding, EU commissioner for justice, said that the EU was determined to respond decisively to any attempts by US lobbyists – many working for large tech groups such as Google and Facebook – to curb the EU data protection law.

“Data protection is a fundamental right in Europe which is clearly enshrined in the Charter of Fundamental Rights. Whilst this may not be the case in other parts of the world, one thing is clear: if companies want to tap into the European market they have to apply European standards.”

Ms Reding’s firm approach is likely to spark a diplomatic battle between Brussels and Washington, which has actively been trying to water down the EU’s tough new privacy legislation by handing US companies a de facto exemption from it.

“Europe, the United States and other democracies around the world share many of the same values,” said William Kennard, US ambassador to the EU at a conference on European data protection and privacy. “We need to accept that each of these democracies has the right to choose whatever legal framework is suited best for them to defend and protect those values.”

Translation: respect our sovereign authority to write the laws we want to write to regulate our companies; don't use sanctions or threat of sanctions to force our companies to abide by your laws. Or, do that to other countries, but give us an exemption because we're good guys that share your values. Further:

US tech companies are trying to shield themselves from the legislation as they argue that it would be unfair for them to be subject to EU laws that are too stringent and could result in expensive administrative burdens and hefty fines for errant companies.

So here we have a US ambassador stating the cause for US companies that complain of the "unfairness" of stringent and expensive compliance costs backed by hefty penalties for noncompliance. The EU's position is, we are trying to protect our people wherever they go in the global market. The world is our jurisdiction to the extent it impacts the people we call "ours," and we aim to protect our people.

Are we not coming to a place where it is becoming obvious that global markets cannot peacefully co-exist with autonomous states? Not one world government at all but instead an impenetrable mass of overlapping and conflicting regulatory states, a venn diagram of massive and chaotic proportions, and no possible way for anyone to comply with all of it. Stock tip: invest in data compliance companies, they might be the most important drivers of the global economy in the near future.

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A development on the public briefing. After being turned away, Victoria Ferauge has now been given the green light to attend tomorrow's FATCA/TRACE briefing on behalf of American Citizens Abroad. I am very glad to see this resolution. It worries me when international bodies ostensibly working on behalf of society try to manage which sectors of society count when it comes to policymaking. Access to meetings is the barest form of participation in such matters. I look forward to hearing from Ms. Ferauge regarding what she hears and sees at the meeting, and am glad that she will be able to attend with only one day's notice. (be sure to note if you are asked for your passport to gain entry).

...you can also attend in person for 100EUR if you are a financial institution, a practioner, or a journalist, according to the information. Though it is not stated, I will simply assume that non-interested observers, such as academics, NGO reps, etc., are also warmly invited.

I am sorry to have to report that this is apparently incorrect, at least, when one NGO (American Citizens Abroad) tried to send a rep, she was rebuffed because space is running out and "government and business have priority."

Frankly, this is outrageous. The OECD has been a club for the revolving door crowd for far too long. When I have criticized the absence of NGOs and other disinterested observers at the OECD I am told they are represented by government. If that ever was the case, I think we can safely say it is not the case now. The OECD cannot simply isolate anyone who doesn't stand to benefit from government-big business collusion forever. Eventually it must lose its ability to state with a straight face that it works on behalf of the peoples of its member states.

Message to OECD therefore: do not call it a publicmeeting if it is not a public meeting, if it is only another forum for government bureaucrats and business leaders, call that what it is: an international lobbying session.

Now, if I am wrong and there is an NGO or any other disinterested, non-business person who is going to be allowed to go to this "public meeting" at which what is going to be discussed by bureaucrats and busienss leaders is how governments will be monitoring and taxing human taxpayers who constitute the peoples represented by the member states, then please, please someone let me know.

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Last fiscal year, Americans paid about 69.9 cents per pound of refined sugar. The world price was less than 27.8 cents.

Why is that? Why, industrial policy/central planning of course: state-provided infrastructure, subsidies, import quotas, tariffs, etc. But according to the beneficiaries of all of this central planning, it's not all the planning. It's global competition from mercenary states that don't have things like...wait for it....labor and environmental protections!

"Go down to Brazil," [anti-NAFTA sugar farmer James Dickson] says. "Check out the working conditions." Brazil's labor costs are much lower, and so are its environmental regulations. "They do stuff to their sugar we would never do."

Carney says not so fast, there's plenty of that to go around:

The federal government also made it possible for the industry to get cheap labor from the Bahamas and Jamaica. Through the British West Indies program, which was created during the Great Depression, "the United States government played a direct role in negotiating employment contracts for offshore laborers," explained Everglades historian David McCally. Uncle Sam even paid to ferry cane-cutters from the islands to Florida.

The guest-worker program put in place exploitative pay levels and work rules. For its part, Florida helped the industry by making it difficult or even illegal for cane cutters to quit. One farmer, lobbying the USDA against allowing Puerto Rican cutters, explained his reason: "Labor transported from the Bahama Islands can be deported and sent home, if it does not work, which cannot be done in the instance of labor from domestic United States or Puerto Rico."

All of this was the subject of a little known film called H2 Worker by Stephanie Black (who also produced Life and Debt, a must-see for anyone interested in development economics) which you should watch if you haven't yet, even though it is admittedly quite slow in parts.

Carney concludes:

Florida sugar cane is an industry literally built on big government, and growers know it will wither in a free market.

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I've mentioned here and there that Starbucks' decision to pledge £20m to the UK as penance to the public for its extremely effective tax planning over the past fifteen years is not a tax but might be and probably is a tax benefit, and I've been asked to explain why that is, and why it matters.

First, lets define what a tax is. A tax is a compulsory extraction of resources undertaken by a government, for which failure to comply results in threat of penalty. A government can do this because it monopolizes the use of force. A tax can be fair or unfair, regressive, progressive, good, bad, or ugly. Not every forceful extraction of resources is a tax per se, but every tax is certainly a forceful extraction of resources. Governments can be (and are) lax, selective, even grossly unjust, in enforcing stated penalties, but so long as the threat exists, an extraction is a tax. No threat of penalty for nonpayment, no tax.

Now let's look at three reasons why Starbucks' £20m pledge cannot possibly be a tax.

It is not being imposed by a government. Despite the BBC calling this an "agreement,"Starbucks itself has characterized the 20m as the product of its own internal decision-making processes. Sure, it's responding to public pressure, but that's not government extraction.

It is not compulsory. After David Cameron piled on at Davos, Starbucks hinted that it might change its mind about its pledge, maybe not be quite so generous if the government won't even bother to be decently grateful about its magnanimity. Who's to stop that? Not HMRC.

There is no penalty if Starbucks doesn't actually hand over the money. At least, not by government; the court of public opinion might be a different story, depends on the news cycle I suppose. But having failed to levy taxes, HMRC can hardly argue if the 20m doesn't show up at some point.

One happy result is that at least Starbucks will not be able to immediately claim the 20m as a credit against taxes it owes at home in the USA (not a tax, let alone one on income, so no foreign tax credit). But what can we say then of the 20m? If it is not a tax, what is it?

The answer is, it is a charitable contribution to the UK government. Why, you may say, that would imply that it's deductible! Yes, depending on the UK's rules for deductibility of contributions to the government. I suspect it would be deductible (UK readers, correct me if I am wrong). Certainly in the US a similar pledge would be deductible under s170:

[T]he term "charitable contribution" means a contribution or gift to or for the use of—

(1) A State, a possession of the United States, or any political subdivision of any of the foregoing, or the United States or the District of Columbia, but only if the contribution or gift is made for exclusively public purposes.

Notice: no need for it to be out of generosity, just need a contribution for exclusively public purposes. Not, say, lobbying, outings for lawmakers, bribery, kickbacks, collusion, etc. But I digress.

Keep in mind that the whole point here is that Starbucks has no income in the UK against which to take any deduction, should it be available...at least, right now. But if the UK rules for NOLs are anything like those in the US, they can hold that £20m on the books for years, maybe even a couple of decades and deduct it later, if and when they ever do have positive income being booked in the UK (maybe subject to some limitations, as in the US).

So, it's not a tax, but if Starbucks in fact turns it over it will be a tax benefit, tucked away somewhere in some regulatory filing in extreme fine print, to be used at some future date to--wait for it---reduce the company's tax bill.

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In 2013, the richest one percent of Americans will receive 18 percent of the tax cuts while ...[t]he bottom three-fifths ... will receive 18 percent of the tax cuts. In other words, the richest one percent of Americans will receive the same share of the tax cuts as the poorest 60 percent of Americans:

Why did the fiscal cliff turn into welfare for the 1%? We know the answer, it's always the same. Incidentally Matt Stoller wrote a follow up piece arguing that if we understand how lobbying corrupts policymaking in the US, we can work against it. But I am not optimistic.

Our most affluent citizens now have less to gain from cooperation with the rest of us than they once had. They can effectively threaten to opt out and invest elsewhere. They can also invest vast resources in lobbying and electioneering.